This summary is based on the first quarter fiscal 2007 earnings call conducted by Chipotle Mexican Grill Inc. (CMG) on May 1, 2007.
Chairman and Chief Executive Officer: Steve Ells
President and Chief Operating Officer: Montgomery F. Moran
Chief Finance and Development Officer: Jack Hartung
Investor Relations: Sandra Curlander
Key Investors Issues
- Earnings per share grew to 38 cents from 26 cents in prior year.
- Revenue increased to $236.1 million from $187 million in the first quarter of 2006.
- Operating cash flow totaled $30.7 million compared to $23.2 million last year.
First Quarter Fiscal 2007 Financial Highlights
Net income for the quarter increased 55.7% to $12.4 million from about $8 million last year.
The firm generated diluted earnings per share of 38 cents this quarter versus 26 cents last year.
The firm’s restaurant mangers and crew continued to build customer royalty and delight new customers, resulting in a healthy 8.3% same store sales for the quarter.
Combined with the opening of 28 restaurants during the quarter and a non-comp opening from last year, the firm’s revenues increased 26.2% to $236.1 million. The 8.3% same store sales was primarily driven by incremental customer visits while menu price increases contributed about 1%. Certain markets were impacted by weather on specific days during the quarter. However, sales in those markets rebounded nicely when the weather cleared resulting in no meaningful net impact on the overall same store sales for the quarter.
The firm’s real estate pipeline is as strong has it’s ever been, as the firm opened 28 new restaurants during the quarter.
The firm also purchased four franchise restaurants in March and acquired the remaining four franchise restaurants during April. The management does not expect the acquisition to have a material effect on its overall results. They will be nominally accretive to EPS about 2 cents on a full year basis.
The restaurant operating margins improved 50 basis points to 20.7% compared to 20.2% last year.
Higher average restaurant sales, menu price increases associated with the introduction of naturally raised meat and labor efficiencies were the primary drivers of this improvement.
Food, beverage and packaging expenses were 31.6% of restaurant sales versus 31.7% last year.
The modest increases in commodity costs were offset by menu price increases and better control. Looking at the balance of the year, the firm continues to expect its food pressure and commodity costs to the effect of higher corn prices on beef and chicken. In addition, the firm will begin to receive avocado from California later this month, at which time the firm will evaluate the quality that’s approved and the pricing impact from the California freeze.
Labor improved 60 basis points to 27.7% versus 28.3% last year due to crew efficiencies and improvements in staff scheduling.
The firm is especially pleased with this result considering it has now implemented a new staffing structure in most of its restaurants. The company made a significant labor investment with the roll out of the new staffing structure, which began last year and its paying dividend in the form of significantly greater internal promotion. The company also created a national labor scheduling nature, which allows its managers to efficiently develop crew and managers under the new structure while also providing great customer service.
Occupancy costs were 7.3% of sales, which represents 10 basis point improvement over last year.
|
